What is pre-settlement funding?
Pre-settlement funding, sometimes referred to as a “cash advance”, is a type of financing that allows plaintiffs to receive money before their lawsuit or claim has been settled. This type of funding is typically for those who are awaiting a personal injury or other civil lawsuit settlement and need financial assistance in the interim. The funding is designed to provide affordable and fast capital to those who may not qualify for traditional financing sources, such as a loan from a bank.
By using pre-settlement funding, plaintiffs can access a portion of their settlement or award before it is finalized. This type of funding can help cover a variety of expenses, such as medical bills, living expenses, and legal fees. It can also allow the plaintiff to remain financially secure while waiting for their settlement to be resolved.
When a potential plaintiff decides to pursue pre-settlement funding, there are several things that need to be taken into consideration. The funding company will first evaluate the facts of the case, the legal merits, and the estimated income from the settlement as a whole. It is important to note that the amount of money that a plaintiff can borrow will vary greatly depending on the legal merits of the case. After the evaluation is complete, the company will determine the amount of money that they are willing to advance.
The next step is for the plaintiff to enter into an agreement with the funding company. This agreement establishes the repayment terms and the interest rate of the loan. It is important to remember that these funding companies make their money by charging high interest rates and processing fees on each of the loan. Therefore, it is important to look thoroughly into each agreement before finalizing it in order to ensure that the terms are favorable.
Once an agreement is finalized, the plaintiff can begin to use the money received. This money can be used to help cover bills and other expenses, and the repayment terms will depend on the agreement that has been reached with the funding company. Most repayment plans allow the plaintiff to use the funds in whatever manner they see fit but will eventually require them to pay back the loan with interest at a certain point. Generally, the repayment of the loans is dependent on when the case is settled and the money is received from the settlement or award.
In conclusion, pre-settlement funding can be an excellent source of quick and affordable financial assistance for those awaiting the resolution of their lawsuit or claim. It can help the plaintiff to remain financially stable and secure during the process, and it allows them to utilize the funds in the way that best suits their needs. It is important to remember, however, that these types of loans typically come with high interest rates and processing fees that could be costly in the end. Therefore, it is important to thoroughly research all companies offering this type of financing before signing an agreement.
